A Cautionary Tale

A couple recently signed a contract to purchase a modest apartment in New York City. They obtained financing, submitted all the required paperwork, and were good to go. They were all set to patiently wait the month or two that normally transpires between contract signing and closing.

Since this was their first apartment, they decided to make use of this interim time to buy all new furniture so they could hit the ground running when they finally got the keys.

Finally, the time to close was upon them. Unfortunately for them, they didn't know that the bank giving them the mortgage runs their credit for a second time just before closing prior to approving the actual disbursement. Their furniture shopping spree created added debt for the couple, and it was enough to cause the bank to pull out of the deal, leaving the couple unable to close on the property and saddled with a ton of new furniture with no place to put it.

The moral of the story is clear. If you are buying a property, do not do anything that could adversely affect your credit rating/debt until after you have actually closed on the property. Make sure that you have a long talk with your mortgage broker about exactly how the process works so that you understand all your obligations and how to avoid pitfalls such as this.

Reach me at: michael.sussilleaux@gmail.com

Summer is almost here!

Happy June to everyone!

As you may know, summer is typically one of the busiest sales seasons of the year for residential real estate in New York, and things are very busy this year. Since the spring of 2009, when the marketplace ground to a halt, we have seen a doubling in the number of residential sales transactions, with more than twice as many apartments being sold this spring compared to spring 2009.

The resurgence of active buyers has also signaled a reduction in the median “days on market” before a property sells, although it is still takes an average of four to five months before a listed apartment actually closes. This is by no means the “irrationally exuberant“ market of 2004-2007 and while sales volume has returned, buyers are very discerning. The demand for any given property is driven by one dominant factor: PRICE!

Well priced apartments are attracting instant activity and occasionally multiple bids, while over-priced listings fail to generate real interest. When a newly listed apartment launches, all the serious, well informed buyers are able to very quickly weigh its attractiveness and appeal in comparison to other similarly priced listings. Readily available market data on the Internet continues to bring much needed transparency to the market, and no longer can a seller reasonably hope for an “uninformed” buyer to overpay for a property.

Looking forward, while no one has a crystal ball, it is fair to say that the latest market “bottom” is behind us. Manhattan apartment prices have generally risen between 4 %and 7% since the beginning of the year, and both buyers and sellers should seriously evaluate their options.

Enjoy your summer!

Reach me at: michael.sussilleaux@gmail.com